For-profit businesses have a strategic decision to make each year. What to do with the profit? Learn how to determine whether to take a dividend or put the money back into the business to grow it further, for example, through research and development.
- So you made a profit this year, that's terrific!…Pop some champagne, you need to celebrate.…Now the big question is, what to do with that profit?…It's a great problem to have,…but one that does require some thinking.…There's two basic things you can do with the money.…You can either keep it in the company…and use it for growing your business,…or you can take it out and keep it for yourself.…If you run nonprofit, you only have one choice,…to keep it in the company.…If you're thinking of taking money of your business,…you have to decide how you're going to take the money out.…
There are essentially two ways…to take money out of your business.…The first is through your salary…and the other is through draws, disbursements,…and dividends.…In sole proprietorship, and partnerships,…there's no difference between salaries and disbursements.…The business is essentially an extension of the owners,…so both disbursements and salaries…are considered personal income…and are treated by the tax authorities as such.…Just make sure you set up drawer account…
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1/23/2018- Explain the advantages and disadvantages of different business and corporate structures.
- Determine cash flow using the concepts of revenue and expenses.
- Demonstrate knowledge of best practice fundamentals for business.
- Explain the importance of a cash reserve.
- Differentiate between the types of insurance and other protections a business should have.
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Video: Reinvestment in your business